Global oil stockpiles have become "scarily thin," Saudi Aramco CEO Amin Nasser said Monday at the Energy Intelligence Forum in London. When the U.S.-Iran war began, the world held about 10 billion barrels of oil stocks, he said. That has fallen to less than 6 billion, and only about 10% of it is practically available because of technical restrictions.
"Until Hormuz fully re-opens and confidence returns, the crude reality is that pressure at both ends of the barrel will intensify," Nasser said, according to Bloomberg.
The International Energy Agency says more than 10 million barrels a day of Gulf output stayed shut in during August. Global observed inventories fell another 95 million barrels that month, bringing the total drop since February to 507 million barrels. Nasser warned that rebuilding inventories will add at least 2 million barrels a day of extra demand over the next two years.
Governments Reach for Reserves
Yet for rebuilding to start, the draining trend must reverse first. The Group of Seven (G7) agreed to release as much as 100 million barrels over four months, starting with "a frontloaded substantial diesel release," according to the leaders' joint statement. The deal also took a U.S. diesel export ban off the table. The statement promised "no restrictions or bans on exports among G7 countries."
POLITICO reported that the ban had been a major worry for Europe, which gets more than half of its diesel imports from the U.S.
"The tone of our discussion was not one of threats; it was constructive," French President Emmanuel Macron said.
The U.S. Strategic Petroleum Reserve holds 283 million barrels, according to Department of Energy data. That number covers only about two weeks of U.S. consumption, Yahoo Finance reported.
A White House official said President Donald Trump intends to complete the full 172-million-barrel drawdown. The administration is also seeking bids for up to 40 million barrels, with companies expected to return the oil "with additional premium barrels." It isn't clear whether buyers will accept those terms.
With midterm elections less than a month away, Trump is reportedly preparing an executive order to expand access to tax-exempt diesel.
"I'll be helping [farmers] with diesel," he said Monday. He has also said the U.S. will be "filling up very shortly our strategic reserves for nothing." Experts say refilling the reserve will be complex, costly and could take years.
Who Benefits From the Squeeze
"While the squeeze on crude is serious, refined fuel prices have risen even more sharply," Nasser said.
IEA data show that Gulf exports of refined products and LPG remain nearly 60% below February levels, a loss of 3.7 million barrels a day.
Combined net diesel and gasoil exports from the Gulf and Russia were 1.6 million barrels a day lower than before the war.
U.S. diesel prices passed $200 a barrel in early September, 94% above prewar levels. Over the same period, ICE Brent futures rose about 45% to roughly $105.
The gap between crude and fuel prices favors refiners with high distillate output and crude supplies that don't pass through the Gulf. The following names might interest swing and momentum traders seeking short-term opportunities.
- Valero Energy Corporation (NYSE:VLO) is the most direct pure-play beneficiary. The firm operates high-complexity secondary conversion units without exposure to Persian Gulf transit lanes.
- Marathon Petroleum Corporation (NYSE:MPC) captures record distillate margins across its massive Mid-Continent and Gulf Coast footprint, where utilization averaged 95%. Its access to pipeline-connected domestic crude isolates it from surging maritime tanker rates.
- Phillips 66 (NYSE:PSX) combines refining with midstream assets, which gives it flexibility to profit from exporting U.S. diesel to markets abroad.
Still, the trend has distinct macro limits. The IEA forecast places the industrial demand destruction risk at 2.5 million barrels a day in 2025. Meanwhile, any breakthrough in U.S.-Iran diplomacy could deflate refining cracks virtually overnight.
Until commercial flows normalize, however, an energy market with exhausted strategic reserves leaves the global refining complex stretched to its operational limit.
